UNDERSTANDING FINANCIAL LITERACY: why it matters and how to build it

Growing up in Sierra Leone, no one really taught us how to manage money. You earn, you spend and by the end of the month, you’re wondering where everything went. From chasing mobile money cashouts to last-minute “borbor” loans, many of us are stuck in a cycle of spending without planning. But this is  the truth: financial literacy is not  just for bankers or big businessmen or women, it’s for you, me, and anyone who wants more control over their future.

Financial literacy is more than math; it’s the foundation of financial freedom. Whether you’re just starting out or looking to level up, understanding money basics can protect you from money mistakes, it  help you build wealth, and give you peace of mind.

WHAT IS FINANCIAL LITERACY?

Financial literacy means having the knowledge, skills, and confidence to manage your money.

Back in 2022 I didn't even know what a budget meant. I use to spend money as soon as I got paid from the side hustle I was doing by fetching water for people. But once I tracked my spending, I realized I wasted over Le500 per month on buying spaghetti.

Have you ever looked at your bank account and wondered where your salary disappeared to?...Does saving money feels impossible sometimes?

 Key areas include:

- Budgeting and Expense Tracking  knowin

-Saving  emergency funds, short‑term vs long‑term savings  

- Debt Management understanding good vs bad debt, interest rates  

- Investing Basics stocks, bonds, compounding  

- Credit and  Loans  credit scores, borrowing smartly  

- Financial Planning setting goals, retirement, risk management  

WHY FINANCIAL LITERACY MATTERS?

 1. When you know how interest works, you’re less likely to get stuck paying high rates on credit cards or payday loans.

2. Even small savings invested wisely grow with compounding. The earlier you start, the more powerful your money becomes.

3. Whether choosing a bank, a loan, or making a big purchase, financial literate people compare options, read the fine print, and avoid costly mistakes.

4. Having a safety net, knowing how to plan for emergencies, and understanding budgeting reduces stress. Money becomes a tool, not a burden.

HOW TO BUILD YOUR FINANCIAL LITERACY LIKE I DID 

These are steps you can take today to improve your money skills 

where your money goes:

 1. Track Every Expense Use a notebook, spreadsheet, or budget app to list what you spend each day. You’ll clearly see where your leaks are on coffee, subscriptions, etc. so you can cut or redirect.

2. Create a Budget:

 Plan your income vs your expenses.

Allocate for needs first (rent, food, utilities), then for savings, then wants. Helps prevent overspending and ensures saving becomes a habit.

3. Build an Emergency Fund:

  Aim for at least 1‑3 months’ worth of living expenses. Provides cushion when life hits hard job loss, health issues, sudden repairs.

4. Learn How Interest andDebt Work:

 Read up on APR, compound interest, how credit cards work, etc. Helps avoid high‑interest traps and use loans wisely.

5. Start Investing Even Small:

Begin with low‑cost options: mutual funds, index funds, or even micro‑investing. Your money works for you; over time, even small contributions create impact.

6. Boost Financial Know‑How:

 Books, podcasts, free online courses, blogs. Knowledge compounds too what you learn early saves you money later.

COMMON MISTAKES YOU SHOULD NOT  DO LIKE I DID BEFORE 

- Ignoring small expenses:  those “just one” coffees or meals add up. 

- Not having a plan: without goals, money drifts away without purpose.  

- Falling for get‑rich‑quick ideas: if it sounds too good to be true, it usually is.  

Imagine you’re paid300 per month. Without tracking expenses, you might feel broke. But once you list everything, you find 50 goes to unused subscriptions,30 to girlfriends 😀😃, 20 to delivery fees. Re‑allocating just 80 per month to savings or investment could grow into something substantial over a year.

Financial freedom doesn’t happen overnight but every dine you save, every smart choice you make, brings you closer. Whether you earn in bulk or small-small, what matters is what you do with it.  

So, start today. Create that budget, track your spending, open a savings account  or even stash some cash in your mobile wallet.

📌 Want more money tips that actually work?  

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